Tuesday, April 11, 2017

The SBA and malingerer

Malingerers
thinking they can buy a business should note that the prices of businesses sold
as a multiple of either EBITDA or SDE (seller’s discretionary earnings) continue
to improve.

According to both
the quarterly Pratt’s Stats Private Deal Update and the quarterly IBBA and
M&A Source Pulse Survey deal multiples remained at or above 2015 and 2014
levels.

Multiples however
do not come close to the 2006 peaks.

If you would like
a copy of either the quarterly Pratt’s Stats Private Deal Update or the
quarterly IBBA and M&A Source Pulse Survey please let me
know.

SBA loans are well
suited for business acquisition financing.

__________________________________________

Indices:

PRIME
RATE= 4.00%

SBA
LIBOR Base Rate April 2017 =3.98%

SBA
Fixed Base Rate April 2017 = 6.13%

________________________________________

SBA
504 Loan Debenture Rate for March

The
debenture rate is only 3.04% but note rate is 3.09% and the effective yield is
4.827%.

________________________________________________AHEAD
OF THE YIELD CURVE

Not a lot of
malingerers in the economy as the employment rate continued to fall and the
employment participation rate held steady for the month of
March.

U.S. payroll gains
appeared to slow in March according to the Labor Department on Friday. Only
98,000 new jobs were created last month. The change in total nonfarm payroll
employment for January was revised down from +238,000 to +216,000, and the
change for February was revised down from +235,000 to +219,000. With these
revisions, employment gains in January and February combined were 38,000 less
than previously reported.

The apparent drop
in March was because it was too cold outside. Hiring tends to show large swings
around weather disturbances, and the March report has two such issues to contend
with: a storm during the payrolls survey week that dumped 10 to 20 inches over a
large swath of the Northeast, and more-seasonal temperatures after an unusually
warm February.

Right after the
jobs report came out, yields for the 30-year Treasury bond fell 3.2 basis points
to 2.958%.

Keep your eyes and
ears open for Thursday’s auction of 30 year Treasury
bonds.

Here is what the
30 year Treasury bond has been doing and this week’s interesting little
table:

2001-
5.49

2002-
5.43

2003-
ND

2004-
ND

2005-
ND

2006-
4.91

2007-
4.84

2008-
4.18

2009-
3.89

2010-
4.61

2011-
2.89

2012-
2.77

2013-
3.25

2014-
3.97

2015-
2.91

2016-
2.32

What does all this
mean?

I don’t
know.

Last month’s
auction of the 30 year Treasury bond ended up with a 3.170 percent high yield
that was the highest awarded at auction since September 2014 and 16.5 basis
points above the previous month's 30-year bond auction
rate.

Minutes from the
Federal Reserve Open Market Committee indicated after their last meeting that
most participants anticipated that gradual increases in the federal funds rate
would continue.

The long end of
the yield curve as reflected in the 30 year Treasury bond appear to be enervating
such splenetic presentiment by being quiescent.

__________________________________________OFF
BASE

You
don’t have to be a malingerer to take this Friday
off.

It
is Good Friday. I don’t why the Federal Reserve
does not recognize Good Friday as a bank
holiday.

It
should as its existence can be tied in some ways to Good Friday itself.

While
Good Friday isn't a federal holiday, it is a stock market and bond market
holiday. After being usually closed on Good Friday, 1907 was the final year in
which the exchange was open on Good
Friday.

That
last one was the same year as the infamous Panic of 1907, when the total value
of all Big Board stocks plunged by more than a third.

Traders
took it as a sign from God that he didn’t want the exchange
open.

By
November 1907, the aggregate value of all shares on the NYSE had plunged 37
percent, and at least 25 banks and 17 trust companies
collapsed

The
crisis ultimately prompted the creation of the Federal Reserve
system.

So what is Good
Friday?

The day marks the
crucifixion and death of Jesus Christ. How could that possibly be considered
good?

Many believe this
name simply evolved—as language does. Originally it was called "God's
Friday."

This seems a
reasonable conjecture, given that "goodbye" evolved from "God be with
you."